Economics of Non-Profit Accounting

Country Reports: Central and Eastern Europe

The International Journal
of Not-for-Profit Law

Volume 5, Issue 1, September 2002


A new law on religious organizations was adopted on 12 February 2002 and came into force on 1 July 2002.  The law transfers responsibility for registration of such organizations from the Interior Ministry’s Department of Religious Affairs to the local courts.  Applications must be made to the relevant district court or, in the case of larger congregations, to the district court where the headquarters of the organization is based.  Unless currently registered, a registration fee of EEK 100 is imposed.  Organizations with an existing registration must re-register by 1 July 2004 if they wish to retain their legal status.  Registration is not compulsory but an unregistered organization cannot enter into contracts as a legal entity and are not eligible for tax exemption.  (Keston News Service, 4 July 2002) 

In April 2002 the Estonian NGO Roundtable adopted a Code of Ethics for Estonian nonprofit organizations.  The code sets out 23 principles of ethical operation grouped under eight headings:

  • democratic governance;
  • civic courage and care;
  • sustainability and prudence in using funds and resources;
  • responsibility and accountability;
  • openness and transparency;
  • independence and avoidance of conflicts of interest;
  • honoring commitments and recognition of authorship of ideas;
  • tolerance.

(Joint Declaration of the Second General Assembly of the Roundtable of Estonian Nonprofit Organizations, 7 April 2002)

The Parliament adopted several amendments to the Law on Income Tax on 25 April 2002.  These include changes, which apply retroactively from 1 January 2002, to the conditions for exempting from corporate distribution tax donations to nonprofit organizations.  The exemption continues to apply to a maximum of 3% of the amount of personal social tax due for the year.  Alternatively, corporate taxpayers can opt for a limit equal to 10% of their annual profits for the previous financial year. Any unused limits can be carried forward or back for one calendar year. These limits do not apply to qualifying nonprofit organizations that are entitled to make such payments without incurring any liability to corporate distribution tax.  (Tax News Service, 24 June 2002)  PB


First Citizen-Initiated Public Participation Regulation Adopted

by ICNL Staff

The Municipal Assembly in Gjakova, Kosovo, recently adopted Kosovo’s first citizen-initiated public participation regulation.  Its passage was the culmination of a months-long advocacy effort by local NGO leaders to ensure effective exercise of the public’s rights to attend Assembly meetings and inspect municipal documents.  The regulation:

  • Requires public notice of Assembly meetings and sets out how far in advance notice must be posted; where and how notice must be given; what information must be provided regarding subjects to be discussed at the meetings, and what constitutes meaningful explanation of agenda items;
  • Establishes procedures for the public’s participation at Assembly meetings;
  • Requires notice and written justification when a meeting is closed;
  • Imposes time limits for the government’s response to a citizen’s request to inspect documents and written justification for a refusal to provide them; and
  • Establishes minimum requirements and a time frame for the government to provide information regarding the public’s right to documents and the government’s structure and functioning.

The regulation was the product of a local NGO working group, aided by technical assistance from ICNL and its local partner IKDO.  The advocacy effort that led to its adoption was supported by the USAID-funded Kosovo NGO Advocacy Project (KNAP) led by East-West Management Institute.  The NGO working group engaged in a multi-faceted advocacy campaign that included seeking critical support at an early stage from a key municipal official, the CEO; ensuring broad-based support from the NGO community and persuading the NGO Forum, an umbrella group of local NGOs, to submit the petition; promoting public awareness through an aggressive media campaign that included newspaper coverage, radio interviews, and a feature program on a popular public television show; and engaging in individual lobbying efforts by working group members.

The initiative was successful in several regards.

  • First, it built substantial capacity among a group of NGO leaders in Gjakova with respect to developing legislative reform campaigns and understanding the fundamentals of participatory government.
  • Second, it enhanced the group’s understanding of the processes and constituencies critical to a successful advocacy campaign.
  • Third, the success of the endeavor demonstrated the potential power of NGO advocacy, not only to those involved, but others who will learn of the initiative.
  • Finally, the regulation itself will facilitate future public participation in municipal affairs in Gjakova, and can serve as a model regulation for other municipalities.


Participation Procedure for NPOs

On 1 June 2002, the Cabinet of Ministers in Latvia adopted a procedure to allow the NPO sector to participate in the development of government policies.  The Centre on Nongovernmental Organizations in Latvia (NGO Centre) has been designated as the sector representative in the weekly meetings of the State Secretaries.  For further information on this development, please read the story in the Autumn issue of SEAL magazine or contact Kaija Gertsnere-Ozola at .   KWS


Change in Taxation of Commercial Activities 

The parliament adopted a new profit tax law in June 2002, which entered into force on 1 July 2002.  The changes include an exemption for income derived by a nonprofit organization from commercial activities up to the lower of EUR 10,000 a year and 10% of the total non-commercial income of the organization.  Law on Profit Tax No. 414/2002.